Commercial Dispute Resolution – Dispute Avoidance 101

The journey starts with a frank and open conversation with one of our accredited specialists and experts in the commercial dispute resolution team who are here to empower you.

This page is designed for directors and officers who aspire to run a well organised organisation, who are interested in being market leaders in best practice.  When you are sick or feel ill, you see a doctor, when you have a niggling pain, you see a physiotherapist. There is nothing wrong with seeing a legal expert or accredited specialist to get your company and business back on track. If there is anything in this page that resonates you or that you would like to discuss, please contact our office to schedule a company dispute with you to discuss any of these topics or related issues.

“Disputes are an unavoidable part of conducting business, however disputes are less common when dealing with well governed and organised companies.”
Mark Streeter – Accredited Specialist – Commercial Litigation

Your Guide to Success

This page focuses on the following types of dispute only: –

• Director Disputes
• Shareholder Disputes
• Family and Business Disputes
• Corporate Governance
• Partnership Disputes
• Employment Disputes
• Contract Disputes
• Fraud
• Insolvency
• Government Investigations
• Dispute Resolution
• What you can do

Directors Disputes

Disputes against directors relate to allegations of breaches of statutory and fiduciary duties. Accusations of acting with a conflict of interest, to the detriment of the company or to take advantage of your position, are common themes around directors behaving badly. The consequences for liable directors can be disastrous with ASIC investigations, ACNC investigations, prosecutions or proceedings in the Federal or Supreme Court. Seek advice now.

Disputes between directors relate to stalemates in management decision making regarding the direction of the company, key stakeholders, financial decision making or often the lack of financial decision making. A strong chair can help you get through these issues, a strong advocate and legal counsel can assist a company through barriers that are preventing real growth. If you seek advice from our firm regarding company director disputes, prepare your constitution, your shareholders agreement and any other associated documentation for the dispute review.

To avoid Director Disputes and avoid failure, learn the 7 Biggest Mistakes Directors make and could have avoided here.

Shareholder Disputes

New start-up companies often enter into what is called a honeymoon phase.  Everything is positive, dreams and the vision are in motion; however, no one has stopped to think about dispute resolution. A simple shareholders agreement may have assisted you to reduce and mitigate disputes that arise.

Shareholders often do not understand or know what rights they have in respect of the company. This is important before investing or being part of a new venture or company. How those shares are held are often a misunderstood concept for shareholders. Seek advice.

Avoid Shareholder Disputes with these 7 tips by reviewing our tips here.

Family Business Disputes

Family businesses are difficult, blood is thicker than water. However, it is fair to say that not all family members will put the family first. Greed, entitlement and family grudges run deep into the various reasons as to why running a family business is complex and difficult. Despite being the highest percentage of small to midsize businesses run in Australia today – it is the most common form of dispute. The dispute is complex and runs sometimes into a multi-generational conflict tied with issues regarding succession, family law, wills and estate planning, guardianship, contractual disputes, fraud and, at the beating heart of the dispute a breach of trust.

Sometimes family members are aware of where that has occurred. Often it is underlying. If you have concerns, reach out and organise a family business dispute review with an accredited specialist.

Corporate Governance

Corporate governance is the essential framework that regulates governance and defines the relationships of directors, members, shareholders and stakeholders. We are often very surprised to see the lack thereof even in the most successful of organisations. It is amazing that most disputes which business are related could have been avoided through the simple implementation and audit of a rigorous corporate governance process procedure or even compliance. Some corporate governance disputes are inevitable because of innate, inherit, or underlying conflicts of interest, personalities or agendas. We provide advice to directors, shareholders or stakeholders on resolving and avoiding those disputes. Stay proactive and read our 9 key tips for avoiding corporate disputes or give us a call on 02 8197 0105 and we will happily provide you advice for your particular case.

Partnership Disputes

A partnership is one mechanism through which to run a business. Partnerships involve arrangements between persons to do business with one another to take advantage of complimenting characteristics. But then if it is a partnership involving sharing profits that also includes the disadvantage of liabilities and debts. Partnerships frequently involve two or more parties. The legal rights and remedies of members of the partnership are governed by a partnership agreement if it is available or under statute under the Partnership Act 1892 (NSW). There is so much on the line with partnerships disputes because you, in your personal capacity, are the one capable of being sued or suing. It is your name that is on the legal proceedings or statement of claim. It is personal. We understand that – that is why you need to obtain advice from an accredited specialist in commercial dispute resolution to understand and to mitigate the risks and exposures of litigation and whether there are any alternative dispute resolution options available to you. Read our guide to saving thousands on Partnership dispute resolution here.

Employment Disputes

People are both the best part and the biggest liability for any organisation. People are inherently complex. Some people are difficult to judge, their feelings, their emotions, their change in circumstances from time to time may be overt, and some of them may be covert. Importantly, they owe a duty to their employer of good faith and fidelity.  Some due to cultural upbringings or elements of nurture in terms of education are more aware and act on a greater understanding of morality. However, desperation or mental illness or other reasons can result in desperate people doing desperate things. You, as a director, must take steps to act in the best interests of the company and that means creating a safe work environment which is documented by systems procedures and implemented through leading by example to ensure that employees can be productive, safe and in a learning environment. There is a fine balance between being firm and fair and bullying and harassment. Be careful. The key is to have your employee’s best interests at heart and after initial training to manage from afar but not too far away. Sometimes the right people need the right people around them and that includes directors. We are here for you, to assist you in employee disputes. Some of these lead to awkward conversations, but what is more awkward is when those conversations are not had or carried out in a procedurally fair way.

Disputes between an employee and their employer can deal with termination, unfair dismissal, adverse action, bullying and harassment, restraints of trade, and enforcing intellectual property or confidentiality rights.

The first step to protecting your company against employment law disputes starts with you Please subscribe to our commercial dispute resolution newsletter to receive helpful artices such as how to save money on resolving Employment Disputes. To Assist you and start the process of improvement.

“Disputes avoidance is simple; all it takes is planning and collaboration. The key is to foster an organisational culture that focuses on improvement and persistence.”

Contract Disputes

Contractor or subcontractor agreements can likely lead to disputes due to the nature of the relationship between the contractor and the contractee. Be wary of sham independent contractor agreements. Your conduct may be affecting their status as a contract agreement as opposed to an employee agreement, know the difference. If you do not, or you want to be sure, contact us.

If you are not sure whether you are dealing with a contract dispute click here.

Fraud

Fraud occurs. Most mid to large size companies prepare for it. Small companies that do not make provision for it or take steps to prevent it are placed in a perilous situation. Do not let fraud be what closes your company’s doors.

Examples of External Fraud are: – security hacks, identity fraud, or complex scams set up to impersonate your most trusted suppliers or business partners, where the fraudster requests money or personal information through spoofing a trusted email address. They can happen inadvertently when an untrained employee clicks on a spam email that lets a virus into your network.

Examples of Internal Fraud are:- misappropriation, stealing and theft. We have seen so many different types of fraud, however they are all very similar in nature. It is a breach of trust. Often with those who are trusted most. DO you have concerns? Never seem to be getting ahead with cashflow despite seeing more work in progress than you know there are overheads? Contact us.

Insolvency

At its heart, insolvency is being unable to pay debts as and when they fall due.

For a company with assets and liabilities it can be that simple and that complex depending on asset realisation. There may be opportunity for restructuring and insolvency.

Do not be scared of debt. Be scared if it is not well managed.

Debt Recovery – We assist businesses with dealing with debt recovery, we act predominately for creditors, however do act for debtors. Failing to respond in a timely way may have disastrous ramifications with a winding up order, and the appointment of an External Administrator.

If you believe your company is insolvent it is vital you seek advice as to your options as soon as possible. Delay may make you liable for claims of insolvent trading. If you are unsure read our article “Six Tips to Restoring your Sleep by Safeguarding your Business”

Government Investigations- ASIC, ACNC and ACCC

We act for companies involved in government prosecutions and investigations. We understand the mandate and role of these organisations and the interaction between regulators and companies.

The Australian Securities and Investments Commission (ASIC) describes itself as an independent government body that enforces and administers Corporations Law and consumer protection law for investments, life and general insurance, superannuation and banking (except lending) throughout Australia. Their purpose is to reduce fraud and unfair practices in financial markets and financial products, so consumers use them confidently and companies and markets perform effectively.

The Australian Charities and Not-for-profits Commission (ACNC) is the national regulator of charities. The ACNC describes its role as follows:-

1. helping charities understand and meet their obligations through information, advice and guidance.
2. Helping the public understand the work of the not-for-profit sector and provide a free searchable database of charities.

The Australian Competition & Consumer Commission (ACCC) regulates and protects consumer rights, business rights and obligations, perform industry regulation and price monitoring and prevent illegal anti-competitive behaviour.

If you have received a Notice of Investigation or request for an interview- you should contact our office immediately for Dispute Review with an Accredited Specialist or Expert.

Dispute Resolution

 Broadly speaking, dispute resolution can draw upon the following mechanisms: –

• Prevention: Documentation, people and document management. Clear and concise drafting in agreements, contracts, terms of trade and correspondence. Ambiguity and uncertainty is expensive when disputes arise.
• Alternative Dispute Resolution: You should be weary about trying to solve everything yourself. Over confidence or a “DIY” jobs end up costing you more in the long run. There are ways to have without prejudice discussions and a raft of mechanism which may be appropriate in the right circumstances; Conciliation, Mediation, Informal Settlement Conferences or Expert Determination.
• Litigation: Failing Alternative Dispute Resolution, or where delay is not an option. Litigation involves filing proceedings with a State or Federal Court or Tribunal. Urgent applications in the Duty List can be turn around in 48 hours, other proceedings may take longer than 6-9 months. Some combine a mandatory mediation function, others require genuine steps to be taken before filing a claim. A Failure to observe the rules can be catastrophic in terms of receiving adverse costs orders.

What happens with costs? If you are not familiar with these concepts in budgeting or understanding the process, let us take the time to explain it to you to guide you. What you may be arguing about may not be worth the financial spend or there may be another way to achieve the same outcome.

Your Decision

The decision is yours. Indecision is not an option, it leads to confusion and uncertainty. If you do not act, someone else will and on their terms.

Contact us 02 8197 0105

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Written by Mark Streeter

The Director of Streeterlaw, Mark has been practicing Law since 1994. He has attained his Masters of Law in 1999 and in 2006 was awarded his Specialist Accreditation in Commercial Litigation. Mark is a member of ARITA, a graduate of the AICD and a member of AICM. A member of STEP, Mark enjoys working in the area of Wills and Estates. In 2020 Mark is the Chair of STEP NSW.

Call us on 02 8197 0105 to book an appointment with Mark Streeter!