Australia’s small businesses deserve affordable access to justice through the Federal Court, the national small business ombudsman says, proposing a small claims tribunal-style alternative to lengthy and financially exhausting legal proceedings.
Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson is calling for the development of a Federal Circuit Court system to hear small business disputes.
Speaking on Canberra’s Radio 2CC on Wednesday, Billson said the legal system and regulators provide some protection to small businesses.
Yet chasing justice through the Federal Court can be too time-consuming and costly for small businesses to pursue, he said.
“There’s a whole bunch of laws at the moment that try and support fair and reasonable commercial conduct, whether it’s between suppliers and supermarket chains or more broadly in the economy,” Billson said.
But those laws are effectively “like hunting dogs that sit on the porch but never get released because it’s so hard to enforce them,” he continued.
Billson suggested a small business may need to spend a quarter of a million dollars to mount a real challenge through the Federal Court.
Relying on the Australian Competition and Consumer Commission (ACCC) to champion the cause through the courts is another imperfect solution, he added.
The ACCC, by necessity, will pursue issues “of material significance to the economy, where there’s systemic or ongoing problems or where there’s considerable public interest,” Billson said.
“The fact that yours and my life has been ruined, and we’ve lost nearly three quarters, a million bucks, will never get through those gates.”
Billson’s proposal is to develop a Federal Circuit Court Small Business and Codes List, which would work like state-based small claims tribunals.
“We need to be able to defend our own economic interests in a right-sized justice process” that provides quick and affordable rulings, he said.
The radio appearance is not the first time Billson has aired the proposal, which he referenced while closing the Council of Small Business Organisations Australia (COSBOA) summit earlier this month.
“Can you imagine an independent contractor, maybe earning barely average weekly wages, going, ‘I’ve got a dispute with somebody, I know, I’ll commit a quarter of a million dollars and two years, and I’ll front up to the Federal Court of Australia knowing that if I get it wrong, I’ve got to pay the other party’s costs?’” he asked at the time.
Small businesses do have access to low-cost dispute resolution services through state and territory small business commissioners, and the ASBFEO itself can point entrepreneurs in the direction of those services.
Some regulatory codes — including the voluntary Food and Grocery Code of Conduct, which Billson introduced and championed in his time as minister for small business — also lean on independent arbitrators to preside over disputes.
That mechanism, which provides an avenue to justice without the courts or ACCC stepping in, is part of its “magic”, Billson said.
Even so, only six complaints have been brought to the code arbiters since its inception, and no compensation has ever been awarded to a small business complainant.
In February, Billson acknowledged that small businesses can face “diabolical” choices “that may harm their own business in order to keep a major supermarket chain as a customer.”
However, he stopped short of outright recommending the code become mandatory, as recommended by independent reviewer Dr Craig Emerson.
“What do you gain and what do you lose if it becomes a formalised mandatory imposition type code that might limit the scope for things, like those up to $5 million arbitration determinations?” Billson said Wednesday.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
