Arbitration, The Process

I believe it is a testament to our members that compared to the number of sales we make, there are very few commission disputes. I am sure this is correct because of the number of people who, when resorting to Arbitration, tell me that this will be their first.

The questions therefore that usually arise are about the procedures. The Arbitration Act defines most of the procedures and rules to be followed but consistently states that these are “unless otherwise agreed by the parties”. This starts by giving the parties the freedom to choose the Arbitrator, venue and time of the hearing.

This flexibility then continues in the overall process, which I believe helps minimise the cost of resolving real estate and many other disputes. Real Estate disputes are interesting in that normally the parties have genuinely attempted to come to resolution. They generally know one another, often very well, and the issues are often well known to the parties.

In the most formal of dispute resolutions, for instance through the Courts, there would be the lodgement of a statement of claim followed by the response in the form of a statement of defence. This is to show the basis of the claim in summary without disclosing the supporting material or the legal arguments. This would be followed by discovery i.e. a list of relevant documents.

There is no stipulation that these steps must take place, or that they cannot be simplified. Personally I tend to avoid these procedures because the parties have inevitably already gone over the issues and the documents.

Hearings would generally follow the established process of the Courts except that, again if the parties agree, there does not even need to be a hearing. The parties can even agree that the Arbitrator can make a decision on the basis of the documentation alone.

In the absence of agreement by the parties on any issue, the Arbitrator makes the decision and in that event would probably be inclined to follow the defined processes.

At the hearing, the claiming party (often the one without the money!) presents their case first, including calling any witnesses. Evidence can, and I believe should, be given under oath which the Arbitrator is able to administer. The defending party and the Arbitrator question the claimant and the witnesses.

The process is then reversed with the defence presenting its case and being subject to questioning.

Normally the defence then sums up its case followed by the claimant. This can be reversed depending on the circumstances and the Arbitrator.

Interestingly even the form of the award is determined by the parties. They can require a full written report giving the reasons for the decision or, if they agree, merely request the award without reasons.

Notwithstanding the flexibility that the Act provides, it requires that the Arbitrator restricts him/herself to the agreed issues (terms of reference), acts fairly and in accordance with the rules of natural justice. Provided they do this, and there is no bias, the Arbitration will be the final, binding and enforceable determination of the dispute.

Michael Pinkney FREINZ AAMINZ
National Councillor
First Published July 2003