Business Dispute Resolution
Business dispute resolution can involve mediation as well as litigation, but my orientation from the outset is always going to be: how do we get into a position to resolve this dispute? I am always trying to arrive at an efficient, effective resolution of the dispute without spending unnecessary amounts of resources. I am looking at an alternative to the typical litigation process, which can often take months or years to reach a resolution. I try to find an opportunity to use mediation or negotiation at various stages, but I will always attempt to resolve the dispute from the outset by encouraging dialogue between the parties, giving them both an opportunity to explain where they are coming from and create an opportunity for resolution. This doesn’t happen in every situation, however.

Sometimes, by the time they have contacted a lawyer, the relationship between the parties has soured, and some litigation will be necessary. What we do then is start the litigation process and take as many steps in that process as are necessary.

Any lawyer who is dealing with business dispute resolution needs to be competent at litigating and using the various litigation tools that are available, as well as having skills as a problem solver. Those problem solving skills involve analytical skills to understand what is going on with the business disputes. Having a sound understanding of business helps a lot in this area too, and I think my previous experience as a business owner and the business manager of various businesses including a public company gives me that background. A knowledge of business is helpful as well as expertise and experience with alternative dispute resolution methods, primarily mediation and negotiation.

Mediation
The benefits of mediation in business dispute resolution.
Litigation is a fairly expensive process, particularly civil litigation. The disadvantage is not only the cost of litigation but also the time involved. A typical civil case can take 18 months to two years to resolve. On the other hand, mediation can be done in a couple of days or in an afternoon, and within a few weeks of understanding the issue. Certainly a major advantage of mediation is its reduced cost and time efficiency.

Another advantage is that the mediation process is not adversarial. The litigation process in Canada is adversarial: it places two parties in opposition to each other in order to test and arrive at the truth. The adversarial process can create a lot of bitterness. A mediation setting encourages discussion between the parties and encourages both parties to have input into the resolution, and so the damage to the relationship is much less.

Mediation is also beneficial because both parties have a role in creating the resolution. They have an investment in it and they are usually happy with the outcome because they have some control versus an outcome being imposed on them by a third party, such as a judge or an arbitrator.

Mediation is a win-win proposition whereas going to litigation is a win-lose proposition. In litigation, one party usually prevails and one loses, and the cost of the litigation goes to the victor. In mediation, both parties have an opportunity to come out as a winner, as long as they go there with an open mind and with a real view to resolving the dispute.

There are some other advantages as well. In mediation, the parties can control the outcome in a way that they cannot in a litigated solution. In litigation, both parties present their best case before the judge. The judge then makes a decision and at times that outcome might be very surprising. Also, mediation aims at encouraging the parties to put their interests, as opposed to their legal position, forward. Often in mediation you will find that a party may have taken a legal position throughout the dispute. This position is based on a legal entitlement but they haven’t explained what their real interest is behind that position. A mediator tries to understand what the underlying interests are. Once those interests come to the foreground, a resolution is usually a lot easier to achieve because now there is a mutual interest in resolving the dispute, not just in saving money or in some other hidden interests. The mediation process encourages the parties to put those interests on the table. That just does not happen in a litigation procedure, which is based on more technical legal positions.

The final benefit of mediation is confidentiality. Civil cases take place in an open courtroom, which means that all of the pleadings and all of the testimony is available to the public. Mediation can take place in a confidential setting and typically a mediated settlement will be confidential unless the parties agree otherwise. There are many situations in business where confidentiality has a high value. So that’s another significant advantage of mediation.

Mediation
Overcoming the disadvantages of mediation in business dispute resolution.
One of the real problems in mediation occurs when the parties have unequal bargaining power. This means one party is a lot stronger than the other.

In a business context, fairly typical situations would be ownership disputes, shareholder disputes, or partnership disputes. One shareholder may be the majority shareholder and also the one who controls the company’s board of directors and all of the resources. This party controls the bank account and can pay for legal fees through the company. As well, he has access to all of the company records and all the financial information about the business. In this situation, it is pretty tough to go in as a minority shareholder and mediate that dispute because of the complete lack of knowledge and negotiating power. One party is holding all the cards.

Mediation is least effective when one party stands to gain a lot and the other party only stands to lose a lot. Our approach is to use litigation to level the playing field because mediation works best when both parties go into the process in the same position: being able to lose the same amount.

Reasons for consulting a lawyer in a business dispute resolution.
It would be great if you could develop a computer program and put it up on the Internet to help people conduct business resolutions themselves. But in reality, there is tremendous skill required to use all of the tools that are available through the litigation process, the court, and mediation. Even choosing the right mediator requires skill in order to match the personality of the mediator with the parties involved. There are a lot of these intangible skills that a dispute resolution lawyer brings to the table in order to help the client resolve disputes more effectively than they could themselves.

A certain number of cases are straight forward, commercial debt for instance, and if the client has a relationship with the third party, the client could probably resolve that by picking up the phone and talking to the person who owes them the money about why they have not paid. Often I recommend that strategy. If it’s a straight forward dispute, then the client can proceed by himself and save the cost of hiring a lawyer. I will even give a prospective client a few tips. We do not typically get involved unless we both believe that legal representation can add some value to the process of resolving the dispute. A lawyer offers a combination of legal experience and business experience, all of which we have gained by resolving hundreds of business disputes.

The process of preparing a client for mediation in a business dispute.
We spend time with the client at the beginning, analysing the case, determining what legal rights and legal entitlements our client has. One way to increase the effectiveness of mediation is to use litigation to ensure that both parties are on equal terms at the outset. If one of the parties conducting the litigation has control of the company’s bank account and can pay for the company lawyer to handle the dispute, that party is going to be at a significant advantage over the party who, for instance, has been squeezed out of the business, has no income because he has been cut off from working at the business and has no access to company resources. We will start the litigation in order to obtain court orders that will level the playing field somewhat. For example, the court can order the other side to disclose all of the relevant documents through the document discovery process. Without litigation, that information may not be available. The person controlling all the key documents is often reluctant to release documents that would be helpful to the other side. We develop a plan at the beginning of the process in order to take a few steps in the litigation process to put our client in a strong position to negotiate. The mediation will be much more likely to succeed if our client is going in with full disclosure.

We also spend a lot of time having the client prepare a chronology of key events. At a certain stage, we will determine what witnesses and documents will be required to prove our client’s case. Once we have that material, we are in a position to mediate, but not before.

Sometimes we turn to expert witnesses, but we use them sparingly because they are very expensive. In certain cases, expert witnesses will be helpful. In business disputes, the main expert we use is a financial expert. Often, business disputes come down to accounting, so accountants are very helpful witnesses in determining the value of a business asset or determining what a business is worth. Business evaluation experts, who are accountants with a specialized designation in business evaluation, can be helpful in cases where the business is going to be split up. They can help determine what the value of that business is. Often the resolution is the process of bridging the gaps between the competing experts: one party’s expert says his value of assets is a million dollars and the other party’s expert values them at half a million or two million dollars. A big part of the job then is to get behind those evaluations and assumptions and find ways to bridge the gap between the two positions.

We are strong proponents of mediation and dispute resolution, but we also know that we have to use the court system as a strategic resource to level the playing field. There are all kinds of other ways you can resolve disputes, other than litigation, once both parties are on an equal footing

Scenarios that require the expertise of a lawyer to resolve a business dispute.
We are often required to assist with either a shareholder or partnership dispute, which is basically an ownership dispute. This would be an internal dispute between the owners of a business sometime after the business has been established. Such disputes are often the result of the lack of considered structuring at the outset of the business venture. Partners or joint venture participants often go into a business arrangement with a lot of enthusiasm but have not really taken the time to think about the future. Quite often when businesses are started, the partners are equal going in and no one has put any thought into the question of what happens if the two equal partners disagree on the direction of the business or on a particular decision to be made. If they are 50:50 owners of the partnership or 50:50 owners of the shares to the company, there is no easy way to resolve a deadlock. A lot of disputes arise from that scenario. The participants have not agreed on a proper structure for the business from the outset and later on when one partner decides he or she wants to leave and focus on other enterprises, a dispute arises about how to deal with that.

Another kind of dispute that business owners face involves a third party. This category includes a number of situations such as contract disputes; payment disputes where a third party fails to pay for the goods and services; and intellectual property disputes, where someone is using someone else’s intellectual property.

Ownership or shareholder disputes and third party disputes are the major categories of situations that arise in business and require dispute resolution services.

Q. My business partner and I are owed roughly $24000.00 as part of a high-tech digital signage project for a large transportation authority in Canada. They have been refusing payment for over 3 months now despite us having installed a working system back in April of this year.

What's the best way to settle this and get our payment?

A. The best solution at this stage is to retain a law firm to issue a demand for payment followed by a lawsuit to recover the funds. Our firm handles these types of cases on a contingency basis. See our collections page for more details or call Meldon Ellis at 604.688.7374.

Q. We are a small business who signed a contract with a company to provide services. They have been making many complaints regarding our work so we decided to terminate the contract. The company said that they did not agree to the termination. One main point is our company name has changed and the contract was signed under the old contract name. Can they do anything about this?

A. The first step is to consider the termination provisions (if any) contained in the contract to provide service. If that contract is silent on termination, then we would look at what would be considered "reasonable notice" to terminate the contract.

Typically, a company name change would not change the previous company's legal obligations.

Q. My daughter recently took my laptop for the weekend to her dads, without my knowledge. I own my own business and my accounting records were on there. Not only did he look at everything for hours, but a copy was taken of all the records. Can I do anything?

A. Yes, you should write him a letter confirming your understanding of what happened; and demanding the immediate return of any copies of this data and demanding that he permanently remove this data from his computer.

And put him on notice that if you suffer any loss or damage from his improper use of your data or intellectual property you will seek damages from him.

Q. I'm planning on hosting regular video game tournaments. The series of tournaments will be for profit, albeit meagre. I have a two-part question.

First, I'm sure I need some kind of commercial license agreement to hold this kind of tournament. However I read online that purchasing the game was license, although I don't believe this to be true. I was just hoping to get this confirmed.

Second, whom should I be requesting this license from? Would it be a game developer, publisher or both?

A. I assume you will you be hosting these games online? Practically all software is sold under license - for example when you buy Microsoft Office you are purchasing a license to use the software.

If you are using gaming software you will need to comply with the terms of that software license.

Q. Can a creditor send out a black list, or disclose financial information a in the way of a mass e-mail to collect money owed?.

A. This could be defamation, depending on the accuracy of the information (truth is a complete defense to defamation). The creditor could sue you for a debt and the lawsuit would be public knowledge. However, if the statements made went beyond the bonafide details about the debt then it could be defamation.

Q. I live in a house, which has separate units with a relative. The mortgage and house are in her name only. I have been paying her cash in the amount of half the mortgage payments. Now there is talk of her selling it and not giving me any of the cash from the sale. Also she remortgaged the house a year ago and the equity are gone.

Can I lien the house for the share I have paid her.

A. In these circumstances you could file a lawsuit claiming that the relative holds a portion of the property "in trust" for you - the claim is known as a common-law constructive trust claim. If you commence this lawsuit you can seek and file a Certificate of Pending Litigation on the property, which will hold up the sale until some arrangement is made to deal with your claim.

Q. I sold my business of 20 years just over a year ago. The money wasn’t great, nowhere near retiring money but business wasn’t going too good. Basically I had no choice but to sell. They had me sign a 5-year non-competion agreement covering North America. I am 44 years old; my wife is disabled and cannot work and have three young children. It is very difficult for me to find a job these days. The only thing I know is the business I sold. What are my chances of re-opening the same type of business?

A. This non-compete is likely overly broad to be enforced by a Court in Canada. The court will not prevent you from going out there and earning a living in these circumstances.

Q. If a document (contract) specifies that notifications be ''in writing'', does an email suffice or does an actual document have to be sent to the individual being notified?

A. Email is a form of writing. However, you should look at whether the agreement specifies the mode of writing. For example, if the agreement calls for notice to be sent to a fax number or to a physical address that is specified, then the notice must be delivered in that specified manner or else it will not satisfy this provision of the agreement. Whereas if the agreement is silent on the mode of writing email will suffice in my opinion.

Q. Can I take legal action against my ex that stole things from our apartment after we broke up? I asked her to leave about 4 months ago and she did. We lived together for 2 years. I had gone away for a week vacation and came back to an apartment missing a lot of things (including: furniture, DVD player, DVDs, clothes, curtains, a table, and even my cleaning supplies).

There was no forcible entry at all and she DID have a set of apartment keys that she hadn’t returned yet. All in all, I figure it’s close to $1000 worth of objects stolen. What are my options? She has admitted being there while I was gone, without my permission, AND admits to taking SOME of the things stolen, but not all.

And I should also mention that some of the ''better'' things in the house were not stolen. As in my TV, my computer and printer, as well as other electronics, a giant tub of change (valued in the hundreds of dollars) and others. So I think that makes it VERY unlikely that an actual ''thief'' broke in after she was there. I want these things back, or at least be reimbursed for them. Any ideas about what should be my next step?

A. Your best option is to hang on to the good stuff that wasn't stolen and move on.

Q. Will I be liable for my Mothers credit card debt?

A. No, unless you provided a guarantee that you would pay if she failed to pay.

Q. My ex-partner bought me a vehicle as a gift. That is why it is registered in my name. I chipped in for a portion of it in cash (maybe 15% of total), which I gave to him and he then paid the whole charge by cheque. We split and I sold the truck. Now he wants the money I got from the sale.

Do I owe him anything?

A. No. If it is a gift then the title and ownership belong to you. If it was a loan or only part of the truck was a gift, then he may have an interest or a claim.

Q. Are estate taxes on principle residence are capital gains taxable on the sale of a principle residence once the residence is put into the estate of a deceased single person - sold after probate - 10 months after death?

A. Yes - they will be taxable to the estate. The taxable capital gain would be the difference between the value at the time the estate acquired the property and the value at the time the estate disposed the property.

Q. Is it true that when you are retired, you are not liable to endorse a loan for someone else?

A. No. Being retired may make it more difficult for a bank to accept your ability to pay a loan, but if a bank accepts someone as a guarantor of loan then that person is liable under the guarantee retired or not.

Q. I have initiated a small claims suit against my previous employer for wrongful dismissal. I am asking for a longer period of severance based on Canadian case law. They have just responded to the claim that I filed and served to them.

Now what? Do I need to file something else of do I just wait for the courts to schedule a settlement agreement? Their response was to ask the case to be dismissed and make all fees my responsibility.

A. You are correct. Your next step will be a Settlement Conference before a judge. You will be required to bring all the documents you are relying on to the conference and a judge will comment on your case and a trial date will be set if you don't settle.

Q. Are restaurant managers/supervisors allowed to schedule their employees for shifts with no end times?

A. Your question relates to minimum and maximum hours of work according to the provisions of the Employment Standards Act in BC. See below:

Minimum daily hours: 34
(1) Subject to subsections (2) and (3), if as required by an employer an employee reports for work on any day, the employer must pay the employee for a minimum of 2 hours at the regular wage whether or not the employee starts work.

(2) Whether or not the employee starts work, the employer under subsection (1) must pay the employee for a minimum of 4 hours at the employee's regular wage if the employer had previously scheduled the employee to work for more than 8 hours that day

Maximum hours of work before overtime applies: 35
(1) An employer must pay an employee overtime wages in accordance with section 40 if the employer requires, or directly or indirectly allows, the employee to work more than 8 hours a day or 40 hours a week.