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)