By Liad Hadar, Director at Hadar Incorporated, Specialist Property Law Firm
This article first appeared in Asset Magazine’s April 2023 edition

The business of property involves a multitude of transactions, from the process of buying or leasing property, entering into shareholders agreements or other contractual agreements with various third parties.

Property transactions are often complex, involving multiple parties and legal documents. With so many factors at play, disputes can arise between parties, leading to lengthy and costly legal battles. However, there is a way to resolve these disputes that is quicker and more cost-effective than traditional court processes: mediation.

I was inspired to write this article after experiencing first-hand how the mediation process works. I assisted a client, a landlord, who had been involved in a multi-million rand claim against a tenant for approximately three years. For the first time in my career, I facilitated the move from litigation to mediation and with the help of an accredited mediator, the matter ended with a settlement being concluded.

What is mediation?

Mediation is a form of alternative dispute resolution (ADR) that involves an independent third party – the mediator – facilitating negotiations between the parties involved in a dispute. Unlike court proceedings, mediation is voluntary, and the mediator does not make any decisions on the merits of the respective parties. Instead, the mediator’s role is to help the parties involved reach a mutually agreeable solution.

In property law litigation, mediation can be an effective way to resolve complex, high quantum disputes between landlords and tenants (as was the case in my personal experience referred to above), property owners and homeowners’ associations, buyers and sellers of property, shareholder agreement disputes and the like.

The advantages – money and time

As we all know, court proceedings can be time-consuming and expensive, with legal fees and court costs quickly adding up.

One of the biggest advantages of mediation is its cost-effectiveness.

Mediation can often be completed in a matter of hours or days, with the parties involved splitting the cost of the mediator’s services.

This makes mediation a more affordable option for those who wish to resolve their disputes without incurring substantial legal fees of pursuing a matter all the way to trial and possible appeals. Essentially, if successful, it brings a matter to its end, once and for all.

Another advantage of mediation is the speed at which disputes can be resolved.

Court proceedings can take months or even years to reach a resolution, causing ongoing stress and uncertainty for all parties involved. Mediation, on the other hand, can often be completed within a few weeks or months, providing a timely resolution to the dispute and allowing all parties to move on with their lives.

Mediation also allows for more flexibility in the resolution of disputes. In court proceedings, the judicial officer’s decision is final and binding, leaving little room for compromise and it is a winner takes all result. Mediation, however, allows for more creative solutions to be proposed and agreed upon by the parties involved. This can lead to more satisfactory and financially sensible outcomes for all parties, as they have had a say in the resolution of the dispute.

Relationships are saved

One of the other key benefits of mediation in property law, particularly disputes between landlords and major anchor tenants for example is that it can help preserve relationships between the parties involved.

Court proceedings can be adversarial, pitting parties against each other and creating a hostile environment. Mediation, on the other hand, is a collaborative process, with the mediator helping the parties to work together to find a solution that works for everyone.

This can help to maintain relationships between landlords and tenants by making future interactions between the parties less contentious and allowing the relationship to exist beyond the resolved dispute. In litigation, the successful end to the process often results in the irretrievable termination of the relationship.

It’s not always an option

Whilst mediation worked for my client in this particular instance, it isn’t even a consideration in some matters. In certain circumstances, the best efforts of the most gifted mediator will clearly be a waste of effort and litigation is the correct approach.

From my experience, my client’s particular mediation was successful because the parties had reached a point in the litigation process where the costs and time spent on the matter was becoming a burden on both parties and there was a consensus reached that it would be in both parties’ best interests to at least explore the possibility of settlement facilitated by a professionally trained mediator.

I have been a lawyer for over 15 years and the fact that this was my first mediation is indicative that it is not a common option. If the circumstances were appropriate, I would certainly encourage other clients to mediate.

For lawyers, especially litigators, mediation does not make you redundant as you still have an important purpose to serve in the process and as an advisor to your clients. In fact, I was very much involved in preparing a Position Statement for the mediator to consider, as well as a Confidential Position Statement to assist the mediator in understanding what my client would consider as a high/low number for the possible settlement terms.

I also attended the mediation with my client to be there as an advisor on the possible settlement terms and assisted in drafting the final settlement agreement for signature there and then, bringing the matter to a successful conclusion for my client.

In conclusion, mediation is a valuable tool for resolving certain disputes in property law. It is a cost-effective and efficient way to reach a resolution, providing more flexibility and preserving relationships between parties. While court proceedings will always have a place in the legal system, mediation offers an attractive alternative for those looking for a quicker and more collaborative way to resolve disputes. If you are facing a property law dispute, consider mediation as an option for resolving it effectively and efficiently.