Small business owners experience a power imbalance in their dealings with big business and government. This can stop them from pursuing the court system because of the cost, time and resources. On 4 December 2017, former Australian Small Business and Family Enterprise Ombudsman Kate Carnell launched a two-part inquiry into access to justice for small business.
Phase II looked at the formal and informal pathways, our court system and explored emerging ideas for streamlining processes.
The final report provides a five point plan to ensure small businesses have access to tailored dispute resolution processes that are less formal, more timely and cost effective. These include:
- strengthening Unfair Contract Terms protections
- promoting alternative dispute resolution
- providing access to voluntary, binding arbitration
- greater access to tribunal and court determinations for disputes
- supporting the wellbeing of small business owners through permanent funding of the Beyond Blue NewAccess for Small Business program.
Phase I examined the nature and incidence of disputes, actions taken by small business when faced with a dispute and the factors that influence whether a small business continues to seek resolution of, or abandoned, a dispute. More than 1,600 small businesses across Australia were surveyed.
The final report found:
- the average cost to resolve a dispute through formal pathways is over $130,000; double of that a decade ago
- payment times and terms remain the biggest cause of disputes
- time and cost are the most significant factors when determining how far to pursue resolution of a dispute
- 22% of small businesses surveyed were involved in a serious dispute in the last five years
- 62% sought legal advice either from a lawyer or another legal service
- when escalated through a formal process, half of small business owners considered the amount of time and effort required was unreasonable.