Small businesses will soon be better able to take on corporate giants in the courts, with the “access to justice” policy getting the nod of approval from both of the major parties.
The bill, which had been pushed heavily by shadow Assistant Treasurer Andrew Leigh (pictured), had initially divided Parliament, but the government has since pledged its support for the measure.
“Currently, small businesses are less likely to take up private litigation against anti-competitive behaviour. Big businesses have deep pockets and armies of lawyers, so the risk of small businesses being bankrupt by legal fees is a significant disincentive to taking action against anti-competitive conduct,” Mr Leigh said.
“Labor’s access to justice policy will level the playing field by allowing a small business to request a ‘no adverse costs order’ early in a court case. If the judge decides that the case is in the public interest, the small business won’t have the risk of paying the other side’s costs if they lose.”
According to Mr Leigh, the proposal had been flagged by Labor during the last election campaign, and was voted against by the government when it was put forward as a Private Senators Bill in 2017.
In the days leading up to the latest parliamentary vote, Australian Small Business and Family Enterprise Ombudsman Kate Carnell had said that the measure would provide a more equal footing for smaller businesses to take up a dispute with big business or even with government.
“At the moment, if a small business owner takes big business or the government to court, they have to cover their own costs and take the risk of paying the other side’s cost if they lose or withdraw from the case,” Ms Carnell said.
“The Treasury Laws Amendment (2018 Measures No. 5) Bill 2018 would allow a small business to request a ‘no adverse costs order’ early in the court case, and if the judge decided the case was in the public interest, the small business wouldn’t have to pay the other side’s cost if they lost.
“Access to justice is regularly raised as an issue with us by small businesses, particularly how expensive and time-consuming the court system can be. Small businesses don’t have that kind of money and time.”
Referencing an inquiry into small business’ access to justice currently underway by her office, Ms Carnell said that the average cost for small businesses to pursue a dispute through traditional channels “was over $130,000”.
“I don’t know many small businesses that have that kind of money lying around in their bank account,” she said.
‘Small business can now stand up to big business’
In a statement once the government’s decision to support the bill was unveiled, Master Grocers Australia CEO Jos de Bruin issued a statement in which he said that it was another step in balancing the scales in a “David and Goliath” battle.
“When we were successful in reforming competition laws in 2017, small businesses saw a way forward to saving their businesses with the introduction of the ‘effects test’. Now, with these further reforms, small businesses will have greater opportunity to fight for their rights against larger businesses where the court believes it is in the public interest to do so,” Mr de Bruin said.
“Small businesses are inevitably hindered by the formidable costs of litigation and the prospect of facing a massive legal bill is an enormous deterrent, even though there may be a serious issue to defend. Small businesses simply cannot take on the bigger corporations that have deep pockets and who are able to garner financial resources to fund large legal firms as their representatives.
“But it’s always been a typical ‘David and Goliath’ scenario when it came to a small business ‘taking on’ a giant business — until now. We believe that the tide has turned with the introduction of these new laws.”
He added: “All those small businesses that have always felt they were simply wasting their time trying to fight big businesses because they couldn’t afford the high costs can now rethink their approach. The new laws providing access to justice through the courts should make those who have been cautious in the past rethink their position as they now have a greater opportunity to stand up and fight.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.