Victorian Small Business Commissioner Consultation paper
Submissions due by 5pm on Tuesday 30 April 2013
MESSAGE FROM THE MINISTER
As the Minister for Innovation, Services and Small Business, I am pleased to provide
Victorians with the opportunity to reflect on the contribution the Victorian Small Business
Commissioner has made over the last 10 years to support a fair and competitive business
environment in Victoria.
Through this consultation paper, the Victorian Government is seeking your feedback on the
functions and role of the Victorian Small Business Commissioner and, in particular, your
views on how we can improve the Victorian Small Business Commissioner’s services to best
meet the needs of all small and medium sized businesses.
The Victorian Government recognises the vital contribution that small and medium sized
businesses make to the State’s economy. We also recognise that not all businesses face the
same competitive pressures. Owners of small and medium sized businesses simply do not
have the resources that larger organisations use to manage the challenges associated with
starting-up, running and growing their businesses. The Victorian Government aims to help
small and medium sized businesses by providing a legislative framework that enables
business owners to achieve their goals.
I invite you to read this consultation paper and submit your feedback. After taking into
account all submissions, we will consider amending the Small Business Commissioner Act
2003 to ensure the role and functions of the Victorian Small Business Commissioner keep
pace with current developments in business and law.
This consultation paper is not an exhaustive list of possible changes that could be made to
the functions and powers of the Victorian Small Business Commissioner. Please raise any
other ideas or views that you see as relevant as we consider the best ways to ensure the
development and success of Victorian small and medium sized businesses over the next
decade.
KEY QUESTIONS
Below is a list of the questions asked in this paper. You will find a brief discussion on each
question throughout the following pages.
1. Should the Victorian Small Business Commissioner’s (VSBC) functions of
investigation and resolution of complaints by small and medium sized (SME)
businesses about ‘unfair market practices’ be extended to include the investigation
and resolution of complaints by SME businesses regarding ‘commercial dealings’?
2. Should the mediation functions of the VSBC in the Small Business Commissioner Act
2003 (the SBC Act) be broadened to ‘alternative dispute resolution’ (ADR) services?
3. Should the VSBC be given the discretion to decide how best to assist with a dispute,
including being able to decline to deal with a complaint if the VSBC is of the opinion
that the complaint is vexatious or trivial?
4. Should the SBC Act be amended to clarify the role of the VSBC in assisting SME
businesses in disputes with government, including local government?
5. Should the SBC Act be amended to stipulate that any commercial lease dispute must
first be referred to the VSBC for ADR before it can proceed to VCAT? If yes, what
exemptions (if any) should apply?
6. Should the VSBC’s power to seek assistance and information from public entities be
extended to include government departments, local councils, individuals and
businesses?
7. Should individuals, businesses and government agencies have stronger obligations
to provide assistance and information to the VSBC in good faith, subject to relevant
statutory exceptions and/or where public disclosure of information might not be in the
public interest?
8. Should the VSBC have the power to list in its Annual Report businesses and
government agencies which unreasonably fail to provide information relevant to a
dispute or participate in ADR?
9. Should the VSBC have the power to issue certificates for commercial disputes
voluntarily brought by an SME business owner to the VSBC?
10. Should the VSBC have the capacity to seek an advisory opinion from the Victorian
Civil and Administrative Tribunal (VCAT) when it is in the public interest to do so?
11. Should the VSBC’s functions be broadened to assist with the development and
provision of dispute resolution services under industry codes
of practice?
12. Should the Commissioner and mediators operating within the Office of the VSBC
receive statutory protection and immunities from liability when exercising in good faith
their legislative functions?
CURRENT ROLE OF THE VICTORIAN SMALL BUSINESS COMMISSIONER
The Victorian Small Business Commissioner (VSBC) is an Australian-first, statutory office
that provides small and medium sized (SME) businesses with low-cost alternative dispute
resolution (ADR).
Since its establishment in 2003 under the Small Business Commissioner Act 2003 (the SBC
Act), the VSBC has set a new national standard for SME business dispute resolution and
advocacy to support a fair and competitive trading environment.
Several other states, namely New South Wales, South Australia and Western Australia,
have subsequently established their own Small Business Commissioner based on the
successful Victorian model and in March 2012 the Commonwealth Government announced
a national Small Business Commissioner, which commenced in January 2013.
The Victorian Small Business Commissioner plays a unique role in offering:
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information and education to promote informed decision-making by SME
businesses and help minimise disputes with other businesses;
preliminary assistance to help resolve disputes without the need for formal
mediation; and
mediation, providing timely, low-cost resolution of disputes through facilitated
agreement between the parties.
Over the past 10 years the Office of the VSBC has received over 11,000 applications for
assistance in resolving SME business disputes and undertaken investigations into alleged
unfair market practices.
The VSBC resolves particular business disputes under the following legislation:
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Retail Leases Act 2003;
Owner Drivers and Forestry Contractors Act 2005
Farm Debt Mediation Act 2011.
Each of these laws (with minor exception) stipulates that any dispute about retail leases,
owner drivers and forestry contractors or farm debt must first go to the VSBC to attempt to
resolve the dispute through mediation before it can be heard at the Victorian Civil and
Administrative Tribunal (VCAT) or be heard by a court in the Victorian legal system (i.e. the
Magistrates Court, the County Court or the Supreme Court).
Other types of commercial disputes not covered by these three Acts can be brought to the
VSBC voluntarily by an SME business owner under the SBC Act.
In addition to the investigation and dispute resolution of SME business complaints, the
VSBC has a key role in promoting a fair and competitive operating environment for SME
businesses. The VSBC does this by providing information and education services and being
informed of issues impacting upon businesses in Victoria.
CURRENT FUNCTIONS AND POWERS OF THE VICTORIAN SMALL
BUSINESS COMMISSIONER
The SBC Act currently provides the VSBC with a range of functions and powers including:
a) facilitating and encouraging the fair treatment of small businesses in their commercial
dealings with other businesses in the marketplace;
b) promoting informed decision-making by small businesses in order to minimise
disputes with other businesses;
c) receiving and investigating complaints by small businesses regarding unfair market
practices and mediating between the parties involved in a complaint;
d) making representations to an appropriate person or body on behalf of a small
business that has made a complaint referred to in (c);
e) monitoring and reporting to the Minister on any emerging trends in market practices
that have an adverse effect on small businesses;
f)
encouraging the development and implementation of small business service charters
within government to ensure small businesses receive high quality service;
g) monitoring the operation and effectiveness of small business service charters;
h) as required by the Minister, monitoring and reporting to the Minister on the impact of
Victorian legislation, government procedures and administration on small businesses;
i)
as required by the Minister, assisting other branches and agencies of government to
develop legislation, government procedures and administration that provide
alternative ways in which small businesses can comply with the requirements of the
legislation, procedures and administration;
j)
investigating compliance with industry codes;
k) advising the Minister generally about matters for which the Commissioner is
responsible; and
l)
advising the Minister on the operation of the Act.
ISSUES FOR DISCUSSION
Dispute resolution powers
Unfair market practices
The SBC Act gives the VSBC powers to investigate and mediate complaints by SME
business owners regarding unfair market practices.
Sometimes a party to a dispute questions the VSBC’s jurisdiction (authority) to mediate on
the dispute on the grounds that the matter does not specifically involve ‘market practices’ but
rather concerns an aspect of the commercial dealings between the two parties more broadly.
A party to a dispute may also question the VSBC’s authority on the grounds that the matter
involved does not meet the criteria of being ‘unfair’.
Respondent parties refusing to engage in voluntary dispute resolution on alleged grounds of
lack of authority prevent SME businesses from benefiting from the dispute resolution
services offered by the VSBC.
Policy issue for consultation:
1. Should the VSBC’s functions of investigation and resolution of complaints by SME
businesses about ‘unfair market practices’ be extended to include the investigation
and resolution of complaints by SME businesses regarding ‘commercial dealings’?
Functions to include the resolution of disputes through alternative dispute resolution
(ADR)
The VSBC has the function of providing mediation services under the SBC Act. However,
mediation is only one of a number of alternative dispute resolution methods that can be used
to resolve disputes. Others include preliminary assistance, conciliation, arbitration,
independent neutral evaluation, assisted negotiation and facilitated meetings.
The dispute resolution functions of the VSBC under the Retail Leases Act 2003 and the
Owner Drivers and Forestry Contractors Act 2005 are expressed in terms of ‘alternative
dispute resolution’ rather than simply mediation services as expressed in the SBC Act. This
broader terminology provides the VSBC with the ability to decide the most appropriate and
beneficial service for dispute resolution on a case by case basis, rather than be legislatively
constrained to mediation.
Policy issue for consultation:
2. Should the mediation functions of the VSBC in the SBC Act be broadened to
‘alternative dispute resolution’ services?
Flexibility in dealing with complaints
If the SBC Act is broadened to allow the VSBC to offer businesses a range of ADR services,
the VSBC will need to be able to decide which ADR method would be most appropriate for
each individual dispute. It may also be desirable for the VSBC to be able to decline to deal
with a complaint if the VSBC is of the opinion that the complaint is vexatious, trivial (having
regard to the costs likely to be incurred in dealing with the complaint relative to the amount
or issue in dispute) or unlikely to be resolved through ADR (for example, where a respondent
party has consistently refused to engage in good faith).
Policy issue for consultation:
3. Should the VSBC be given the discretion to decide how best to assist with a dispute,
including being able to decline to deal with a complaint if the VSBC is of the opinion
that the complaint is vexatious or trivial?
Powers to assist in disputes between SME businesses and government
The VSBC currently receives applications from SME business owners to assist in disputes
with government and the VSBC attempts to resolve such disputes in the same way as it
does with business-to-business disputes.
However, the SBC Act makes no explicit reference to the dispute resolution functions of the
VSBC with regard to business-to-government disputes. This situation can raise uncertainty
about the role of the VSBC to assist in disputes between SME businesses and government.
Policy issue for consultation:
4. Should the SBC Act be amended to clarify the role of the VSBC in assisting SME
businesses in disputes with government, including local government?
Mandatory referral to ADR for all commercial leases
If an SME business owner has a dispute about the terms of their lease, it can be unclear
where they can turn for help to resolve the dispute. This is because the process for resolving
an SME business dispute currently differs according to the use of the business premises.
Retail lease disputes must first go to the VSBC for attempted dispute resolution before the
matter can proceed to VCAT (if unresolved). This low cost, quick and effective ADR service
can save the tenant and landlord time and money and can help maintain good relations
between the parties involved. If ADR is not successful, the VSBC can certify in writing that
mediation was attempted and this enables the dispute to progress to VCAT.
However, with other business lease disputes the processes and resources available to SME
business owners to attempt to resolve the dispute are not as clear. Such disputes can
currently be handled by the VSBC under the SBC Act (where there is no mandatory referral),
although the availability of this service for non-retail leases is not widely understood. Further,
whether or not a lease is a retail lease for the purposes of the Retail Leases Act 2003 can
often be unclear.
This inconsistency can cause confusion for SME business owners.
Policy issue for consultation:
5. Should the SBC Act be amended to stipulate that any commercial lease dispute must
first be referred to VSBC for ADR before it can proceed to VCAT? If yes, what
exemptions (if any) should apply?
Ability to gain information
Provision for the VSBC to seek assistance and information
The SBC Act was specifically intended to ensure that government has regard for the
particular needs of SME businesses.
However, the SBC Act only provides that the VSBC may request information from any ‘public
entity’. Within the meaning of the Public Administration Act 2004 a ‘public entity’ does not
include government departments or local councils.
Further, there is no provision in the SBC Act for the VSBC to obtain information from an
individual or a private sector organisation involved in a dispute with an SME business.
Policy issue for consultation:
6. Should the VSBC’s power to seek assistance and information from public entities be
extended to include government departments, local councils, individuals and
businesses?
Stronger obligations on individuals, businesses and government to provide
information
Under the current legislation the VSBC can only ‘request’ assistance or information relevant
to a dispute. The VSBC has no power to ‘require’ or ‘compel’ parties to provide assistance or
information in good faith (subject to any statutory restrictions or public interest considerations
that may take priority).
Policy issue for consultation:
7. Should individuals, businesses and government agencies have stronger obligations
to provide assistance and information to the VSBC in good faith, subject to relevant
statutory exceptions and/or where public disclosure of information might not be in the
public interest?
Annual reporting of parties that unreasonably fail to provide information or assistance
to the VSBC
The VSBC has provided a successful low cost mediation service to SME businesses since
2003. However, at times the VSBC has encountered a business or government agency
which is unwilling to participate in mediation. This prevents an SME business owner from
benefiting from the services offered by the VSBC and forces them to litigate if they wish to
pursue their dispute.
Keeping in mind that commercial-in-confidence or public interest principles require specific
confidentiality measures to be applied and that in such circumstances it is reasonable to
withhold certain information there are a number of ways in which the powers of the VSBC
could be strengthened in order to encourage parties to engage in ADR.
One such way would be for the VSBC to list in its Annual Report any business and
government agency which unreasonably fails to provide information or assistance to the
VSBC.
Policy issue for consultation:
8. Should the VSBC have the power to list in its Annual Report businesses and
government agencies which unreasonably fail to provide information relevant to a
dispute or participate in ADR?
Dispute certification functions
Voluntary referral to ADR
The overarching obligations of the Civil Procedure Act 2010 (Vic) require parties to a
commercial dispute to demonstrate that they have taken reasonable steps to resolve the
dispute before proceeding to court. One way of showing this is to provide a court or tribunal
with a certificate to show that ADR has been attempted, or that a party has refused to
mediate.
The VSBC currently offers mediation services to resolve many types of commercial disputes
involving SME businesses, not only those that are mandatorily referred to the VSBC.
However, the SBC Act does not enable the VSBC to issue a certificate where a party has
voluntarily approached the VSBC for mediation services.
Policy issue for consultation:
9. Should the VSBC have the power to issue certificates for commercial disputes
voluntarily brought by an SME business owner to the VSBC?
Supporting a fair business environment
Powers of the VSBC to seek an advisory opinion from VCAT
From time to time, a matter of dispute comes to the attention of the VSBC which raises
questions as to how a particular piece of legislation in the VSBC’s jurisdiction should be
interpreted. Sometimes, the same questions will have been raised with the VSBC on
previous occasions but they have never come before VCAT or the courts for adjudication.
Consequently, the VSBC and the parties to a dispute cannot look to case law to provide
clarity to the issue.
However, VCAT has the power to issue what is known as ‘advisory opinions’ on matters
raised with the Tribunal outside a hearing on a particular dispute. Such an advisory opinion
can provide clarity on how a particular law should be interpreted so as to give authoritative
guidance for SME businesses across Victoria as to how disputes would likely be resolved.
Policy issue for consultation:
10. Should the VSBC have the capacity to seek an advisory opinion from VCAT when it
is in the public interest to do so?
Industry codes of practice
Under the SBC Act the VSBC is able to investigate compliance with industry codes of
practice. In addition, the VSBC can and does mediate disputes consistent with relevant
industry codes such as the Franchising Code (using the SBC Act) and the Owner Drivers
Code.
Over the past 10 years there has been little demonstrated need for the VSBC to investigate
compliance with industry codes. However, the VSBC is often asked by industry to provide
feedback and assistance regarding the development of voluntary codes and the VSBC has
facilitated meetings with industry on specific code proposals.
It is worth noting that a primary role of the Australian Competition and Consumer
Commission (ACCC) is to administer industry codes prescribed by the Australian
Government. The ACCC also provides guidance to assist industries wanting to develop a
voluntary code of practice. However, the ACCC does not provide ADR services.
Policy issue for consultation:
11. Should the VSBC’s functions be broadened to assist with the development and
provision of dispute resolution services under industry codes of practice?
Managing risk
Statutory immunity
A statutory immunity confers certain rights and privileges on a person or public entity
primarily by way of an exemption – granted by statute – from prosecution in particular
circumstances.
The VSBC administers three Acts, the Retail Leases Act 2003, the Owner Drivers and
Forestry Contractors Act 2005, and the Farm Debt Mediation Act 2011 and, alongside the
SBC Act, provides dispute and mediation services under each Act. When undertaking
functions under these Acts, the Commissioner and mediators in the Office of the VSBC must
apply principles of natural justice and, as such, it can be argued that they exercise quasijudicial functions. However, only the Retail Leases Act 2003 and the Owner Drivers and
Forestry Contractors Act 2005 afford any statutory immunity to mediators and none of the
four Acts afford any immunity to the VSBC.
Policy issue for consultation:
12. Should the Commissioner and mediators operating within the Office of the VSBC
receive statutory protection and immunities from liability when exercising in good faith
their legislative functions?
HAVE YOUR SAY
The Victorian Government is keen to hear your feedback and invites you to submit a
response to this consultation paper.
Please note the following points to assist the preparation of a submission:
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there is no specified format or length;
you do not need to answer every question;
evidence to support your submission should be provided wherever possible;
submissions may be made public unless clearly marked “in confidence”; and
the name and address of the person or organisation making the submission must be
provided.
Public consultation period: 8 March 2013 – 30 April 2013
Closing date for submissions: 5pm on 30 April 2013
The Government will assess your feedback and take it into consideration when reviewing the
Small Business Commissioner Act 2003.
Please post or email your response by 5pm on Tuesday 30 April 2013 to:
Mr Roger Arwas
Executive Director
Small Business Victoria
GPO Box 4509
MELBOURNE VIC 3001
roger.arwas@dbi.vic.gov.au
SMALL BUSINESS VICTORIA
DBI 6303 07/03/13