New Treasury Laws: No adverse costs orders for small businesses?

Stated on the Australian Small Business and Family Enterprise Ombudsman website to be a bill to “allow small businesses better access to justice when in dispute with big business or government” and to be “an important step towards levelling the playing field and [which] would help address the power imbalance that currently exists”, the Treasury Laws Amendment (2018 Measures No. 5) Bill 2019 was passed by both Houses of Parliament on 18 February 2019 and received Royal Assent on 12 March 2019, becoming the Treasury Laws Amendment (2018 Measures No. 5) Act 2019 (the Treasury Laws Act)1. 

The Treasury Laws Act contains Schedule 5, which was introduced as part of the amendments by the Senate on 14 February 2019 and relates to Small Business Access to Justice.
 
Importantly, there is the addition of a section on “[n]o adverse costs orders” to section 82 of the Competition and Consumer Act 2010 (Cth) (CCA). Section 82 of the CCA applies to actions for damages for contraventions of a provision in Part IV (Restrictive Trade Practices), Part IVB (Industry Codes), or sections 55B (Payment surcharges must not be excessive), 60C (Price exploitation in relation to the carbon tax repeal) or 60K (False or misleading representations about the effect of the carbon tax repeal etc. on prices) of the CCA.

Relevantly and, without being exhaustive, Part IV (Restrictive Trade Practices) includes, very generally:
  1. provisions regulating cartel conduct by corporations (in broad outline, regarding provisions in relation to price-fixing, restricting outputs in the production and supply chain, allocating customers, suppliers or territories, or bid-rigging, by parties that are, or would otherwise be, in competition with each other);
  2. provisions regulating contracts, arrangements or understandings that restrict dealings or affect competition;
  3. provisions regulating engagement in secondary boycotts for the purpose of causing substantial loss or damage, or substantial lessening of competition, or boycotts with the purpose, or having or likely having the effect of preventing or substantially hindering a third person from engaging in trade or commerce involving the movement of goods between Australia and places outside Australia;
  4. prohibitions of contracts, arrangements or understandings affecting the supply or acquisition of goods or services;
  5. provisions regulating conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition by corporations with a substantial degree of power in a market;
  6. provisions regulating, in trade or commerce, engagement in the practice of exclusive dealing by corporations;
  7. provisions regulating engagement in the practice of resale price maintenance by corporations or other persons;
  8. provisions regulating dual listed company arrangements that affect competition;
  9. prohibitions of acquisitions that would result in a substantial lessening of competition.

The new subsections to section 82 of the CCA provide that an applicant seeking damages under that section in respect of Part IV of the CCA (Restrictive trade practices) may at any time during proceedings on the matter also seek, essentially, a no adverse costs order from the Court.

The Court may order that an applicant is not liable for the costs of any respondent to the proceedings, regardless of the outcome or likely outcome of the proceedings, but only if the Court is satisfied of the following:
  1. The action raises a reasonable issue for trial;
  2. The action raises an issue not only significant for the applicant but which may also be significant for other persons/group of persons; and
  3. The disparity between the financial position of the applicant and the respondent(s) is such that the possibility of a costs order against the applicant might deter the applicant from pursuing the action. 
The third element of the test above, in particular, appears largely in line with the theme of providing access to justice to small businesses.
 
There are also changes to allow the Australian Small Business and Family Enterprise Ombudsman, when the appropriate conditions are met, to provide assistance in advising on and in preparing a person’s case for a no adverse costs order as described above.
 
Schedule 5 commenced on 13 March 2019, but the section on no adverse costs orders will only apply to actions brought on or after 1 July 2019.
 
The effect of the no adverse costs order to section 82 of the CCA and the other associated changes will remain to be seen, including the extent to which it will increase access to justice and the degree to which it may level the playing field for small businesses in the context of restrictive trade practices.