Plans to beef up NSW small business commissioner’s powers to take on big business in court

The proposed powers for the New South Wales small business commissioner released last week reveal the commissioner will have the capacity to join litigation actions in support of small business or to initiate litigation itself.

Under the proposed powers the NSW commissioner will be able to “provide low cost mediation services to resolve small business disputes with other businesses or government bodies” and “advocate on behalf of small businesses to minimise administrative burden.”

The commissioner will be able to require a party to produce evidence related to a dispute and will be able to require a party to attend a mediation and answer questions.

This still doesn’t mean a dispute will be forced into settlement, and parties will retain the right to litigate through the courts.

But the commissioner will have the power to join a litigation action in support of a small business or initiate litigation.

Alyssa Stempniak, senior adviser at the New South Wales Small Business Commissioner, told SmartCompany the proposed legislation went further than other states.

In particular, she points to the ability of the commissioner to require information within a specified time frame and the ability of the commissioner to require a person to answer questions and otherwise assist in a matter, within a specified time frame.

“The premises of the mediation proposals have been modelled off the Retail Leases Act which operates in NSW and has been a successful model for resolving disputes without the need for mediation,” says Stempniak.

The mediation provisions in the Retail Leases Act have a success rate of over 80% for formal mediation.

Stempniak says even though the courts often require mediation prior to litigation anyway, this is “not always” the case and the proposed mediation requirements will not result in duplication.

“Some bodies like the Department of Fair Trading and other government bodies already have processes set up that deal with these type of things, so we have been very careful that these processes do not duplicate those,” she says.

The commissioner joining a litigation action or initiating one would be “a last resort” according to Stempniak.

“The idea of this proposal is that things will be resolved informally before that mediation process itself,” she says.

“It goes towards addressing some of the power imbalances: if a larger company who has a lot more time and resources says, ‘I’m not paying, sue me to get the money’, small businesses do not have the time or money to follow up on that.

“It puts small business on more of an equal footing and allows them to have the ability to resolve disputes without having to go to court.”

Peter Strong, executive director of the Council of Small Business Australia, tells Smart Company the proposed changes are “fantastic”.

“What we believe will happen is that there actually won’t be that much litigation. At the moment, we have a distinct lack of power, the power rests with big business and not with the small business person,” he says.

“What that meant in the past was even if small business was right they were not able to win anything, so the small business person lost the house.

“Now if big business is in the wrong, they will know there is no use waiting, they will be pursued with people with pockets just as big as theirs.

“Big businesses will not pursue a court case they are going to lose, which means the behaviour of big businesses like landlords and franchisors will change.”

Strong says he also supports plans for the commissioner to be able to assess the performance of government agencies when it comes to small business.

“It puts them on record that they will be named and shamed if they ignore the needs of NSW small business people,” Strong says.

The NSW Government appointed former ACCC associate commissioner Yasmin King as the state’s first small business commissioner in July last year.

The appointment was part of an election promise by NSW Premier Barry O’Farrell to provide additional support to the small business sector.

King is travelling across NSW to hear from small business owners about the proposals. In the meantime, the consultation paper and a survey are available at the NSW Small Business website. 

The consultation period will end at 5pm on Friday, July 27, 2012.