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/Factsheet_print/Cooperatives_and_associations/Running_a_cooperative/_Resolving_co-operative_disputes.pdf
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Standard fact sheet.
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Large print fact sheet.

Resolving co-operative disputes 

What is a dispute? 

A dispute may arise where there is disagreement between individuals. The disagreement may arise from a genuine difference of opinion or insufficient knowledge of the facts or circumstances.

Co-operatives, like any organisation, may experience conflict or disputes. A dispute can be between members, between members and directors, between directors and external parties and between organisations.

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How can a dispute affect an organisation? 

It is sometimes difficult to determine why and how a dispute has arisen. However, if a dispute is not well managed or resolved, it can have a significant impact on the co-operative, its activities and its members.

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Who handles disputes within a co-operative? 

The board of directors is responsible for managing the co-operative on behalf of the members. This responsibility includes handling internal disputes between members of the co-operative and between members and the co-operative itself.

The co-operative’s rules must set out a grievance procedure for dealing with disputes. The rules constitute a contract between the co-operative and it members and any alleged breach of the rules should be dealt with according to the dispute resolution procedure in the rules, or private legal action if this becomes necessary. A member may appoint any person to act on his/her behalf in the grievance procedure and the procedure must allow for natural justice to be applied. A good dispute resolution process will save the co-operative time, money and anxiety.

Standards Australia has prepared a framework document titled Dispute management systems for the prevention, handling and resolution of disputes. This standard can be purchased and adapted to specific needs. Visit www.standards.org.au for more information on this standard.

A code of conduct outlining the expected behaviour of members should also assist in minimising disputes.

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Can NSW Fair Trading intervene in a dispute? 

NSW Fair Trading cannot intervene in matters concerning the internal administration of a co-operative, including disputes. Fair Trading cannot provide legal advice or interpret the co-operative’s rules. Neither the Commissioner, Secretary nor the Minister has the authority to intervene or determine the facts of any internal dispute.

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What can NSW Fair Trading do? 

Fair Trading can only intervene in matters relating to alleged breaches of the Co-operatives National Law (CNL) including, but not limited to:

  • continuing to operate whilst insolvent or unable to pay debts
  • acting with intent to defraud or for any other fraudulent purpose
  • failure to hold board meetings
  • failure to hold an annual general meeting
  • failure to maintain minutes of meetings
  • failure to provide financial reports to members
  • failure to lodge annual reports.

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What questions should be asked if a dispute arises? 

A number of questions should be asked if a dispute arises as the answers will help to determine the best course of action to resolve the dispute. These include:

  • What exactly is the dispute about?
  • Is the dispute disrupting the activities of the co-operative?
  • Have there been attempts to resolve the dispute?
  • What is the procedure for settling disputes as contained in the co-operative’s rules?
  • Do the parties have all the information they require?

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What should I do if I have a dispute? 

The first step should be to try to resolve the dispute directly with the parties involved. If this direct approach fails, then you should use the dispute resolution procedure in the co-operative’s rules. It is important to note that the rules for many co-operatives require the member and co-operative to undertake a particular process to resolve a dispute that cannot be resolved directly with the co-operative.

If the matter remains unresolved, you may wish to seek independent legal advice or use an alternative dispute resolution method.

If a co-operative has adopted the Model Rules then the rules provide for a mediation process and if the dispute is not resolved through that process then an application may be made to the Supreme Court for resolution of the issues.

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How do I select a dispute resolution method? 

Methods to resolve disputes range from informal discussions and agreement with the co-operative through to mediation or litigation and a formal determination by a court.

Many factors may influence the method adopted to reach a resolution, including the grievance procedure set out in the rules, the nature of the dispute, the relationship between the parties, the desired control over the process, the potential costs involved, and the willingness by the parties to resolve the dispute.

The goal should be to resolve the dispute at the earliest opportunity in the simplest and most cost effective way for all involved.

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Alternative dispute resolution (ADR) 

A co-operative or members of a co-operative may choose to resolve disputes through an alternative dispute resolution process (ADR). ADR is the general term used to describe processes other than judicial determination, which usually involve an independent person assisting the parties to resolve a dispute. This alternative to litigation gives the parties the opportunity to work through the problem and negotiate an outcome. The independent person assisting the parties may be referred to as a mediator or an ADR practitioner. ADR may include negotiation, mediation and arbitration.

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What is the last resort? 

If parties are unable or unwilling to resolve the dispute through an ADR process then litigation may be the action of last resort. If a dispute goes to court then the parties cease to influence the process with the procedures governed by court rules and the discretion of the judge. Parties should seek independent legal advice if they choose to have the dispute determined in court.

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Where can I get information on ADR? 

There is a growing body of information available on ADR and mediation standards. The following organisations may assist in understanding ADR, the processes involved and accessing ADR services:

  • Australian Government Attorney-General's Department
    The Attorney-General's Department provides advice on ADR issues and policy to Australian Government agencies and basic information about ADR processes and resolving disputes generally. Information is available on 6141 3222 or visit it’s website at www.ag.gov.au
  • Mediator Standards Board (MSB)
    The MSB is a central entity responsible for development of mediator standards and accreditation through a National Mediator Accreditation System (NMAS). Information on mediator standards and accreditation is available at www.msb.org.au.  MSB also provides a contact list for registered mediator accreditation bodies which will enable you to check if a mediator is accredited.
  • Law Society of New South Wales
    The Law Society offers a mediation program aimed at people who want to avoid going to court and who are willing to negotiate a settlement. Information is available from the Dispute Resolution Department on 9926 0333 or visit www.lawsociety.com.au.  The Society also provides a list of government and non-profit organisations that offer ADR services.
  • Lawlink NSW
    Lawlink NSW is the online portal to law and justice agencies and services in New South Wales which includes information concerning ADR and provides a list of ADR service providers. For more information visit www.lawlink.nsw.gov.au
  • Community Justice Centres (CJC)
    Community Justice Centres provide free mediation and conflict management services to assist people to resolve disputes. Information is available from the CJC on 1800 990 777 or visit the website at www.cjc.justice.nsw.gov.au
  • NSW Small Business Commissioner (SBC)
    The Office of the Small Business Commissioner in NSW provides low cost mediation services to small businesses involved in commercial disputes. If a dispute is able to be resolved informally there may be no cost to the small business. Information is available from SBC on 1300 795 534 or visit www.smallbusiness.nsw.gov.au

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Where can I get legal advice? 

You can obtain legal advice from the following sources:

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Need more information? 

Contact Registry Services
PO Box 22
Bathurst NSW 2795
Telephone: 6333 1400
Freecall: 1800 502 042
Email: registryinquiries@finance.nsw.gov.au

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