Mediation may not be mandatory before commencing retail lease proceedings
In brief - Mediation may not be necessary if it would not resolve the dispute
In Fordham Laboratories Pty Limited v Sor & Anor, the New South Wales Supreme Court held that mediation is not necessary before commencing an action under the Retail Leases Act if the court is satisfied that mediation would not resolve the dispute. However, mediation is normally a necessary step where it may resolve the dispute. Courts should normally stay proceedings until mediation occurs.
This means that in certain circumstances you may not have to do mediation before commencing proceedings under the Retail Leases Act.
In 2003 Fordham Laboratories leased retail premises in South Camden to Kim-Po Sor and Vattanak Im for a period of three years with an option to renew the lease for two further three-year terms. Kim-Po Sor and Vattanak Im took up the first option and continued their lease for the further three years.
After the lease expired in 2009, they continued to occupy the premises as a monthly tenancy. Eventually Fordham Laboratories told Kim-Po Sor and Vattanak Im that they wanted to end the tenancy and required them to vacate the premises by 31 July 2009.
Fordham Laboratories brings action for cost of repairing retail shop premises
In November 2009 Fordham Laboratories brought an action in the Local Court for $68,201.65 against Kim-Po Sor and Vattanak Im for, among other things, the costs of repairing the retail shop premises.
Kim-Po Sor and Vattanak Im argued that the proceedings could not continue until the claim had been mediated in accordance with the Retail Leases Act. The Act states that a retail tenancy dispute may not be the subject of proceedings before any court until a written certificate is produced stating that mediation has failed to resolve the dispute, or the court is satisfied that mediation is unlikely to resolve the matter.
The Local Court held that Fordham Laboratories had commenced proceedings before complying with the requirements of the Act and as a result the proceedings were struck out.
Fordham Laboratories successfully appeals Local Court decision
Fordham Laboratories appealed this decision, arguing that the judge had erred in preventing the commencement of proceedings before complying with the requirements of the Act.
On appeal, the New South Wales Supreme Court overturned the decision of the Local Court and found in favour of Fordham Laboratories. The Court held that mediation is not always required before the commencement of proceedings.
This is because the Act allows courts to hear disputes where they are satisfied that mediation is unlikely to resolve the dispute. However, the Court noted that in cases where mediation may resolve the dispute, courts should at their discretion stay proceedings until mediation occurs.
Article by Gary Newton, Partner and Faith Laube, Paralegal