Michael Pallister is the tenant of unit 10, 17 Stanton Court. He has been a tenant at the property for 3 years. His rent is currently $200 per week, which he thinks is good value. Other tenants in the building are paying $250 per week for similar units.

Currently Michael's arrears of rent amount to $1600.

Michael is a self-employed kitchen fitter but he has very little work at the moment due to the recent economic downturn and he is uncertain as to how he is going to pay his current rent arrears.

Michael's original lease of 12 months has now expired and he has a periodic tenancy, which means that his landlord, Clynt Wellington, could terminate his tenancy by giving appropriate notice whenever he wishes.

Michael is concerned about his tenancy position. He is also concerned that he will forfeit his bond of $800 and that his ability to find alternative rental accommodation will be jeopardised by his poor rental payment record.

Clynt has sent a final letter of demand to Michael demanding payment of the $1600 arrears in rent.

Michael can borrow $1200 from his brother, Pat, to pay Clynt but he cannot find the other $400.

Clynt also has financial concerns. He is currently being pursued by the Tax Office for a payment of $1000, which needs to be paid within the next seven days, otherwise the Tax Office will take legal proceedings against him to recover the sum due.

In the circumstances, Clynt would be prepared to accept a payment from Michael of $1000 in full and final settlement of his claim, if that payment was to be made immediately.

1. How could this matter be resolved using a distributive bargaining approach? In the process identify the positions and interests of both Clynt and Michael and their BATNAs. (15 marks)

Before Michael was able to come to a payment arrangement with Clynt, he heard from his brother, Pat, that he had lost the sum of $1200 on the horses and therefore, could not now lend him this sum. Michael, who is a kitchen fitter, is still very short on work and does not know how he is going to pay Clynt.

Clynt managed to resolve his position with the Tax Office because he discovered that his wife was entitled to a tax refund of $1100 and he was able to use this sum to pay off his debt.

Clynt also owns another unit at Woodside Park.He is currently in employment but has job concerns as he has heard that the bank where he works may introduce some job cuts due to the deteriorating economic climate. Clynt is not certain yet if he will be affected by the job cuts or not.

Clynt has a problem with his Woodside Park unit, which is untenanted and needs a new kitchen to be installed. Clynt actually has the new kitchen available, having won it in a competition at his local Bunnings store. The problem is that Clynt does not have the skills to install the kitchen himself. He thinks that the labour costs would be about $1000 but Clynt does not have this sum available, and is very doubtful as to whether he would be able to borrow any more money to pay for the installation of the kitchen. In any event Clynt is not keen to borrow more money, bearing in mind the concerns he has about his job position.

The difficulty is that Clynt needs to have the new kitchen installed so that he can rent his Woodside Park unit and therefore have an income from the unit to assist with the payment of his mortgage on it.

Clynt is concerned about the current situation as the bank has written to him and told him to put his account in order and to pay the outstanding mortgage repayments

1. How could this matter be resolved using an integrative negotiation approach? (15 marks)
2. If you were asked to mediate this matter, what process would you adopt to assist in its resolution? (10 marks)
3. Under what circumstances would mediation be appropriate for resolving this and why? (10 marks)